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Chapter 1: How Tribal Leaders Can Support Homeownership

Tribal leaders strive to ensure healthy, safe, and productive lives for the next seven generations. They aim to preserve their community’s way of life through their culture, language, and traditions. Above all, they seek to create opportunities for tribal members to live their lives to their fullest potential. Promoting homeownership in tribal communities can help tribal leaders to fulfill each of these objectives.

The tribal chairman told me, “Let’s build some houses.” But he wanted me to leverage our Indian Housing Block Grant so we could build more homes for tribal members at every income level.
—VICTOR VELASQUEZ, Executive Director, White Mountain Apache Housing Authority

What can tribal leaders do to support homeownership?

The most important step that elected and appointed tribal leaders can take in promoting homeownership opportunities is to understand how homeownership impacts the social and economic health of the community. They also can ensure they have the appropriate legal infrastructure and land management systems in place to provide certainty for lenders, homebuyers, and other stakeholders involved in the home buying and mortgage processes.  Finally, they can create an environment that fosters vibrant mortgage and residential construction markets within their communities.

Following are three strategies to support homeownership in Native communities:

Strategy 1

Understand how homeownership impacts the social and economic health of a tribal community.

  • Homeownership provides secure shelter.  The serious lack of housing stock on reservations, seen in data on residential crowding, underscores the need for a mechanism that allows families who can afford to use mortgage financing to build, purchase, or rehabilitate a home that provides a roof over their heads and a place to live in a location near their extended families, jobs, businesses, farms, ranches, or educational opportunities.
  • Homeownership strengthens tribal sovereignty.  When tribal governments create the legal infrastructure necessary to govern the residential construction and mortgage markets within their jurisdiction, they are exercising their right to self-governance and creating a legal framework designed to support the tribal government’s vision for the future of their community, rather than deferring to federal or state laws and regulations.
  • Homeownership stimulates tribal economies.  Providing opportunities for tribal citizens to live and work on reservation stimulates the local economy.  Rather than commuting from border towns, tribal workers can relocate back home, keeping their dollars circulating within the community.  Increasing homeownership expands workforce development, employment, and small business growth in the residential construction industry. It also boosts the demand for housing-related goods and services, such as appliances, furnishings, and home improvements. In addition, homeowners can accumulate equity in their homes as they pay down their mortgages, which is the primary way most families build personal financial wealth and one of the most common sources of small business start-up capital.
  • Homeownership promotes family stability and self-sufficiency.  Because many tribal communities face severe housing shortages, second- and third-generation families are forced to share homes with their extended families, even if they can afford to support their own household.  Increasing homeownership opportunities could provide relief from overcrowded housing situations along with more family stability. Obtaining and managing mortgage financing also provides opportunities for families to enhance their financial capability, money management skills, and self-sufficiency through personal finance and homebuyer education. Lastly, one of the most attractive benefits of homeownership for many Native families is the opportunity to invest in an asset that can be passed down to future generations.
  • Homeownership leverages scarce housing resources.  Notwithstanding the federal government’s trust responsibility to provide safe and healthy housing for tribal citizens, many tribal leaders struggle with inadequate resources to meet the needs in their communities. Providing homeownership for tribal citizens who can afford it allows tribes to supplement and leverage their Indian Housing Block Grant funds provided through the U.S. Department of Housing and Urban Development (HUD).  Homeownership allows tribal leaders to offer housing options for working families of all income levels and helps to address shortages by opening low-income rental units to families who really need them.

Strategy 2

Prioritize the governmental functions that provide certainty for lenders, homebuyers, and other stakeholders involved in the homebuying and mortgage processes. 

Tribal governments that exercise their sovereignty and prioritize the governmental functions necessary to support a mortgage market and a residential construction industry can increase access to homeownership in the communities. Tribally designated housing entities (TDHEs) or housing departments have an important role to play in promoting homeownership, but certain governmental functions cannot be delegated and require leadership and action from elected or appointed tribal leaders.

  • Enact legal infrastructure.  Mortgage transactions are generally governed by a combination of state and federal law.  As sovereign nations, tribal governments may need to enact their own codes to govern the residential construction and mortgage processes on tribal land.  This may include mortgage, foreclosure, and residential building codes. These laws must be institutionalized and should not change when a new administration comes into office. Mortgage agency Fannie Mae has a model “memorandum of understanding” that may give tribal leaders information on this.
  • Identify a clear path for civil claims involving mortgage foreclosure and eviction. In addition to enacting laws governing the mortgage process, it is critical for tribal governments to have court systems in place, free from political interference, that provide a mechanism for laws to be enforced and a venue for all parties to seek legal remedies. Lenders may be reluctant to do business in a jurisdiction where they are not familiar with the tribal laws or court system. By providing a clear, transparent, and predictable process for civil claims, tribal leaders can help to address these concerns without sacrificing their sovereignty.
  • Negotiate with federal and state agencies, private lenders, and investors to access government and conventional loan programs. To provide the authority for certain lenders to do business or use certain federal programs in a tribal jurisdiction, tribal governments may need to enter into agreements with those lenders or the relevant federal agencies. To make the full range of public and private mortgage loan products available to their citizens, tribal leaders should seek to enter into those agreements and negotiate terms that recognize the tribe’s sovereignty, consider the interests of the borrowers, and address the requirements and concerns of the lenders. 
  • Define the tribe’s role in the event of a mortgage delinquency, default, foreclosure, and/or eviction.  Many first-time homebuyers are faced with the challenge of staying current on their mortgage loan payments. Borrowers who are behind on their payments are considered delinquent. In most cases, providing counseling and other interventions early during a delinquency can help to keep borrowers on track. After a certain amount of time, however, lenders may determine that a borrower is in default, which means they have failed to make loan payments according to the terms of their mortgage agreement. Being in default could cause the lender to terminate the agreement and could lead to foreclosure and eviction from the home. 

On trust land, addressing delinquencies, defaults, foreclosures, and evictions can become a lengthy, complicated, and costly process for lenders and borrowers. Some tribes are taking an active role in helping to minimize delinquencies and prevent defaults and foreclosures in their communities. When foreclosures do happen, these tribes may choose to assist with property disposition to ensure that the transaction is resolved consistent with tribal law and in the best interest of the community.  For example, a tribe or its housing department may help to find another tribal family who meets the loan qualification requirements to move into the house and take over the mortgage payments, so that the lender need not open a trust land home to nonmember ownership.  If another qualified borrower is not identified, the tribe may decide to purchase the home to add to its own housing inventory rather than allow the home to remain vacant and face the possibility of becoming vandalized and the site of criminal activity. 

  • Develop a land management program that supports the mortgage process. Access to homeownership in Native communities can be impacted by a tribal government’s approach to land management. Tribal leaders who have undertaken comprehensive land-use planning that involves geographic information systems (GIS) mapping; residential, agricultural, and commercial zoning; transportation planning; and the installation of physical infrastructure such as water, sewer, and other utilities have made it easier for individual homebuyers and other builders to construct new homeownership units. In addition, mortgage-based homeownership has become even more accessible where tribal land departments have implemented a streamlined leasing process that allows tribal citizens to obtain a lease and use that leasehold interest as collateral for their mortgage loan in an expeditious manner that recognizes the time sensitivity and collateral requirements of lending transactions.

In communities where the Bureau of Indian Affairs (BIA) adds another layer of complexity in the leasing and land title clearance processes, some tribes have adopted their own residential leasing process pursuant to the authority provided under the HEARTH Act, or compacted or contracted the Land Title and Records Office (LTRO) function from the BIA. 

Strategy 3

Create an environment that fosters vibrant mortgage and residential construction markets within their communities.

Tribal leaders can actively engage in bringing resources and partnerships to their communities to expand homeownership for tribal citizens. As one of the largest investors in their community, a tribal government can leverage its influence with local lenders and other partners to benefit prospective mortgage financing opportunities. Mortgage markets can be fostered in many other ways as well.

  • Set the tone. Tribal leaders can certainly set the tone for promoting and supporting homeownership as an important component of the tribe’s housing plan. Creating certain expectations in the community may help to set this tone and may include:
    • Requiring residents to pay full rental amounts, according to income guidelines;
    • Encouraging residents to attend financial and homebuyer education courses, especially those whose income puts them near the rent ceiling;
    • Enforcing the timely payment of all tenants accounts receivables (TARs); and
    • Promoting the message that homeownership is possible for anyone committed to the process, even if no one in their family has ever been a homeowner.
  • Identify a lead entity.  Although the homeownership process may involve many tribal departments, tribal leaders should identify one entity to spearhead the effort. That entity could be the TDHE, another tribal department, or a local nonprofit. This entity can help to identify and navigate the leasing and mortgage processes and leverage resources to support homebuyers.
  • Allocate financial resources. As resources are available, tribal leaders can allocate funds to support homeownership by funding down payment and closing costs assistance, gap financing or subsidies for residential construction, or homebuyer education programs, among other related needs. 
  • Provide opportunities for tribal citizens to expand their financial capability and homebuyer readiness.  In some communities, tribal leaders offer tribal employees the option to attend financial education courses “on the clock” as an employee benefit. Tribal leaders also have embedded financial education opportunities into other tribal services such as Head Start, social services, temporary assistance for needy families (TANF), youth programs, summer internships, or K-12 schools.
  • Develop relationships with lenders. Tribal leaders can leverage existing relationships with financial intuitions with which the tribe already does business. A lender that holds a tribe’s bank deposits might be more open to a considering how to expand that banking relationship to include support for a mortgage program for tribal citizens. In some cases, tribes may consider creating a new Native community development financial institution (CDFI) that would help to increase access to mortgage financing. Or they may choose to invest capital in an existing Native CDFI serving their community.
  • Recruit insurance providers and other private sector providers. Tribal leaders can support the mortgage process by building relationships with insurance providers, appraisers, inspectors, and contractors who understand the process of working on trust land. By coordinating their engagement in the community, homebuyers may benefit from cost savings through lower transportation costs.
  • Encourage tribal citizens to become residential construction professionals. To address the shortage of housing stock on the reservation, some tribal leaders have supported training for tribal citizens and employees to become certified as residential construction professionals such as inspectors and appraisers. These efforts could be coordinated with tribal colleges, TDHEs, nonprofits, workforce development programs, and tribal employment rights offices (TEROs).
  • Make the most of the link between homeownership and economic development. Tribal leaders could explore ways that tribal enterprises and tribal citizen-owned businesses in the residential construction field could support the development of housing stock and promote both the economic development and homeownership goals of the community. In addition, as new tribal enterprises require labor, tribal leaders could simultaneously consider developing homeownership opportunities for those new employees.

By examining the economic and social impacts of homeownership, prioritizing key government functions, and creating an environment that fosters a vibrant mortgage and residential construction market, tribal leaders can plan an active and meaningful role in promoting homeownership opportunities in their communities. This handbook provides guidance and resources to support those efforts. 

Tribal governments exercise their right to self-govern by establishing the legal infrastructure necessary to govern the residential construction and mortgage markets within their jurisdiction.